The transition of power in Oman from the deceased Sultan Qaboos to his cousin and the country’s new ruler, Sultan Haitham bin Tariq, has been smooth and quick, but the new sultan will soon find that he has a task in shoring up the country’s economic position.

Above all, the fiscal and debt profile of the country requires careful management. Fiscal discipline was rare for Oman even during the oil price spike of the 2000s. Although oil prices only collapsed in 2014, Oman has been registering a fiscal deficit since 2010, reaching a 20.6 per cent high in 2016. As long as fiscal deficits remain elevated, so will Oman’s need to finance those deficits, predominately by borrowing in the local and international market.

Oman’s Debt-to-GDP ratio has been rising at a worrying pace, from 4.9 per cent in 2014 to an IMF-estimated 59.8 per cent in 2019. By 2024, the IMF is forecasting the ratio to reach nearly 77 per cent. A study by the World Bank found that if the debt-to-GDP ratio in emerging markets exceeds 64 per cent for an extended period, it slows economic growth by as much as 2 per cent each year.

Investors are willing to lend to Oman, but the sultanate is paying for it in terms of higher spreads due to the underlying risk markets are placing on the rising debt profile of the country. For instance, Oman has a higher sovereign debt rating than Bahrain yet markets perceive it to be of higher risk, making it costlier to borrow. Failure to address the fiscal and debt situation also risks creating pressure on the country’s pegged currency.

If oil revenues remain low, Sultan Haitham will have to craft a daring strategy of diversification and private sector growth. He is well placed for this: Sultan Haitham headed Oman’s Vision 2040, which set out the country’s future development plans and aspirations, the first Gulf country to embark on such an assessment. However, like all vision documents in the Gulf, Oman’s challenge will be implementation.

In the age of climate change, renewable energy is a serious economic opportunity, which Oman has to keep pursuing. If cheap electricity is generated it could also be exported to other Gulf states and to south Asia. In Oman, the share of renewables in total electricity capacity was around 0.5 per cent in 2018; the ambition is to reach 10 per cent by 2025.

However, in order to reach this target, Oman would have to take additional measures such as enhancing its regulatory framework, introducing a transparent and gradual energy market pricing policy and integrating all stakeholders, including the private sector, into a wider national strategy.

Mining could provide another economic opportunity for Oman’s diversification efforts, with help from a more robust mining law passed last year. The country has large deposits of metals and industrial minerals and its mountains could have gold, palladium, zinc, rare earths and manganese.

Oman’s strategic location connecting the Gulf and Indian Ocean with east Africa and the Red Sea could also boost the country’s economy. The Duqm special economic zone, which is among the largest in the world, could become the commercial thread between Oman, south Asia and China’s ‘Belt and Road Initiative.’

Oman has taken important steps to make its economy more competitive and conducive to foreign direct investment. Incentives include a five-year renewable tax holiday, subsidized plant facilities and utilities, and custom duties relief on equipment and raw materials for the first 10 years of a firm’s operation in Oman.

A private sector economic model that embraces small- and medium-sized enterprises as well as greater competition and entrepreneurship would help increase opportunities in Oman. Like all other Gulf economies, future employment in Oman will have to be driven be the private sector, as there is little space left to grow the public sector.

Privatization needs to continue. Last year’s successful sale of 49 per cent of the electricity transmission company to China’s State Grid is a very positive step. The electricity distribution company as well as Oman Oil are next in line for some form of partial privatization.

The next decade will require Oman to be even more adept in its competitiveness as the region itself tries to find its new bearings. Take tourism for instance; Oman hopes to double its contribution to GDP from around 3 per cent today to 6 per cent by 2040 and the industry is expected to generate half a million jobs by then. Over the next 20 years, Oman will most likely be facing stiff competition in this area not only by the UAE but by Saudi Arabia as well.

The new sultan has an opportunity to embark on deeper economic reforms that could bring higher growth, employment opportunities and a sustainable future. But he has a big task.

This webinar, part of the MENA Programme Webinar Series, will examine the trajectory of political and security dynamics in the Gulf in view of the ongoing rift within the Gulf Cooperation Council (GCC), the death of Sultan Qaboos in Oman, the escalation of tensions between Iran and the United States, and the COVID-19 crisis.

Speakers will explore the orientation of the GCC under a new Secretary-General and the prospects for mediation between Qatar and its neighbours, the future of Omani domestic and foreign policy under Sultan Haitham bin Tariq Al Said, eventual transitions to new leadership in Bahrain and Kuwait, and whether the impact of COVID-19 may help replace the confrontation within the GCC with closer coordination among its six member states.

The webinar will be livestreamed on the MENA Programme Facebook page.

Revenues for pharmaceutical companies need to be 'delinked' from sales of antibiotics to avoid their over-use and avert a public health crisis, says a new report from the think-tank Chatham House.

Over-use of antibiotics is contributing to the growing resistance of potentially deadly bacteria to existing drugs, threatening a public health crisis in the near future. The report notes that, by 2050, failing to tackle antibiotic resistance could result in 10 million premature deaths per year.                                       

Novel antibiotics to combat resistant pathogens are thus desperately needed, but market incentives are exacerbating the problem. Towards a New Global Business Model for Antibiotics: Delinking Revenues from Sales states that,                                       

'The current business model requires high levels of antibiotic use in order to recover the costs of R&D. But mitigating the spread of resistance demands just the opposite: restrictions on the use of antibiotics.'

                                       

To tackle this catch-22 problem, the Centre on Global Health Security at Chatham House recommends the establishment of a global body to implement a radical new business model for the industry, which would encourage investment and promote global access to - and conservation of - antibiotics.      

The current business model has several perverse effects. As R&D is an inherently risky and costly endeavour, the industry is chronically under-investing in new treatments. Today, few large pharmaceutical companies retain active antibacterial drug discovery programmes. Re-stoking the industry's interest in antibiotics would be one of the primary roles of the new body.   

Secondly, the need to recover sunk cost under the current business model encourages both high prices and over-marketing of successful drugs, making potentially life-saving treatments unaffordable to many in developing countries, while simultaneously encouraging over-use in developed markets and increasing resistance.   

The new global body would address these challenges by ‘delinking’ pharmaceutical revenues from sales of antibiotics. It would do this by directly financing the research and development of new drugs, which it would then acquire at a price based on production costs rather than the recovery of R&D expenses. Acquisition could take the form of procurement contracts with companies, the purchase of full IP rights or other licensing mechanisms.                                       

This would enable it to promote global access to antibiotics while simultaneously restricting over-use. Conservation would be promoted through education, regulation and good clinical practice, with the report recommending that 'proven conservation methods such as antibiotic stewardship programmes… be incentivized and implemented immediately.'

Priorities for R&D financing would be based on a comprehensive assessment of  threats arising from resistance. Antibiotics would qualify for the highest level of financial incentives if they combat resistant pathogens posing a serious threat to human health.                                       

Finance for the new body would come from individual nation states, with the report noting that this could 'begin with a core group of countries with significant research activity and large antibiotic markets, (though) it is envisaged that all high income countries should make an appropriate financial contribution.'                                 

It is not yet clear exactly how much funding would be necessary to combat resistance, but with inaction expected to cost $100 trillion in cumulative economic damage, the report argues that 'an additional global investment of up to $3.5 billion a year (about 10 per cent of the current value of global sales of antibiotics) would be a bargain.'

About 90 per cent of refugees living in camps have no access to electricity and many lack any form of lighting at night, says a Chatham House report for the Moving Energy Initiative. Energy poverty in refugee settlements is not on the radar of international initiatives and humanitarian agencies are ill-equipped to deal with the scale of need. 

Heat Light and Power for Refugees: Saving Lives, Reducing Costs zooms in on the energy needs of refugees and displaced people worldwide, and presents the first ever estimates of the volume and costs of what they use.

'The problem goes beyond electricity. 80 per cent of those in camps rely on firewood for cooking and, as a result, we estimate that some 20,000 people die prematurely each year due to the pollution from indoor fires. Exposure to extremes of cold and heat are also killers for people living in flimsy, temporary shelter,' says Glada Lahn, senior research fellow at Chatham House. 'The current lack of provision for energy undermines the fundamental aims of humanitarian assistance,' she adds.

There are nearly 60 million forcibly displaced people in the world, and they pay staggering costs for energy. The 83,277 households living in Dadaab in Kenya, the world’s largest refugee settlement, spent an estimated $6.2 million on firewood last year, which accounts for approximately 24 per cent of their overall household income. (The average UK household spent 4 per cent of its income on energy in 2011.) In Uganda, almost half of refugee households surveyed by the UNHCR skip meals because they do not have enough fuel to cook with.

'The imperative is to find humane, creative and cost-effective ways to respond to the needs of so many individuals, most of whom are women and children.  Improving access to clean, safe and sustainable energy offers a promising way forward,' says Kofi Annan in the report’s foreword.

The report calls for an overhaul in the way that heat, light and power are delivered in humanitarian crises. It makes the case for new partnerships between humanitarian agencies and private providers to increase clean energy access in refugee settlements. Investment in energy infrastructure will also benefit host communities in some of the world’s poorest countries.

'As refugee households spend approximately $2.1 billion on energy each year, developing local markets for energy services could be part of a mix of solutions,' adds Lahn. 'Using green, culturally appropriate technologies could save lives, reduce CO2 emissions by 11 million tonnes per year and radically improve living standards. Introducing even the most basic solutions, such as improved cookstoves and basic solar lanterns, could save $323 million a year in fuel costs.' 

Other findings include:

• Rape and violence against women is common in many unlit camps. Only 4 per cent of women and girls in households in the Goudoubo camp in Burkina Faso would go out after dark due to the lack of streetlights.
• Wood equalling around 49,000 football pitches worth of forest (64,700 acres) is burned by displaced families living in camps each year, mainly in countries suffering severe deforestation, because they have no alternative sources of energy.
• Firewood consumption emits nearly twice as much CO2 as liquid petroleum gas and produces little energy in comparison to its carbon intensity.

International Development Minister Grant Shapps said:

‘Across sub-Saharan Africa, hundreds of millions of people still do not have access to electricity. Women and girls are at risk of violence after dark, families are forced to inhale toxic kerosene fumes, and energy remains unaffordable for many.

‘With the technology in place and investors coming on board, the time to act is now. The UK's Energy Africa campaign is already kick-starting a solar revolution across the continent.

‘Supporting the Moving Energy Initiative is another way Britain can help boost access to clean, reliable and affordable energy. This will transform people’s lives and help achieve the UN’s goal of universal energy access by 2030.’

Chatham House has been named Prospect magazine’s Think-Tank of the Year at a ceremony in the Houses of Parliament. The institute was also the winner in the UK categories for International Affairs and Energy and Environment. The quality, credibility and impact of Chatham House’s research was acknowledged for helping to create better understanding of key global phenomena at this critical time in world affairs. The judges commented that the institute’s work is ‘reliably excellent’ and a ‘gold standard of knowledge and professionalism’.  

Specifically, the US and the Americas and Asia programmes’ joint report Asia-Pacific Power Balance: Beyond the US-China Narrative, by Xenia Wickett, John Nilsson-Wright and Tim Summers, was singled out for being an important resource to help explain the developing geopolitical relationship between the United States and China.

The Energy, Environment and Resources department’s livestock project was a major factor in their award in the Energy & Environment UK category, including the report Changing Climate, Changing Diets: Pathways to Lower Meat Consumption by Laura Wellesley, Antony Froggatt and Catherine Happer, which developed recommendations for how dietary change can be effected in different national and cultural contexts.

Dr Robin Niblett, director of Chatham House said ‘The integrity and authority of Chatham House’s research is needed more than ever and I am extremely proud of our staff and their work particularly during this difficult and challenging year in world affairs’.

The Review on Antimicrobial Resistance, chaired by Jim O’Neill, was commissioned by former UK prime minister, David Cameron, in July 2014. Supported by the UK government and the Wellcome Trust, the final report of the review was published in May 2016 and has had a global impact in terms of motivating political leaders and decision-makers to take more seriously the threat posed by antimicrobial resistance.

Yet there is now a perception that the political momentum to address the issue is waning and needs to be reinvigorated.

In a further report produced by Chatham House, the progress of the recommendations of the review is assessed and the key ways to move forward are identified.

Panellists at this event, where highlights of the report are presented, provide their assessment of the progress so far and discuss priorities for future action.

The report was funded by Wellcome.

As a geographical concept, ‘Indo-Pacific’ has existed for decades. As a political and strategic concept, it has since 2010 gradually become established in the foreign policy lexicon of some countries, especially Australia, India, Japan and the United States. However, China seems to be reluctant to identify itself as part of the Indo-Pacific; Chinese leaders believe that the US-led Indo-Pacific strategy aims to contain China's rise. While the battle between the two geographical concepts ‘Indo-Pacific’ and ‘Asia–Pacific’ may be fairly easily settled in the future, US–China strategic competition has just begun. Will the Indo-Pacific become a battlefield for US–China rivalry? How will China cope with the US ‘free and open Indo-Pacific’ (FOIP) strategy? How will other regional actors respond to the US–China strategic competition in the Indo-Pacific? What are the strategic implications of the ‘Indo-Pacific’ concept for regional order transformation? How will the Indo-Pacific be institutionalized, economically, politically and strategically? This article introduces the January 2020 special issue of International Affairs, which aims to address those questions, using both country-specific and regional perspectives. Seven articles focus on the policy responses of major players (Australia, China, India, Indonesia, Japan and ASEAN) to the US FOIP strategy and related US–China rivalry in the region. A further three articles examine the profound implications of Indo-Pacific dynamics for regional institution-building and for geopolitical and geo-economic architecture.

This webinar, part of the MENA Programme Webinar Series, will examine the trajectory of political and security dynamics in the Gulf in view of the ongoing rift within the Gulf Cooperation Council (GCC), the death of Sultan Qaboos in Oman, the escalation of tensions between Iran and the United States, and the COVID-19 crisis.

Speakers will explore the orientation of the GCC under a new Secretary-General and the prospects for mediation between Qatar and its neighbours, the future of Omani domestic and foreign policy under Sultan Haitham bin Tariq Al Said, eventual transitions to new leadership in Bahrain and Kuwait, and whether the impact of COVID-19 may help replace the confrontation within the GCC with closer coordination among its six member states.

The webinar will be livestreamed on the MENA Programme Facebook page.

Kazakhstan has attracted international attention due to its energy resources, its relative openness to foreign investment and its proximity to Afghanistan, all of which influence its foreign policy. The withdrawal of ISAF forces from the region in 2014 and Kazakhstan's participation in a number of regional and international initiatives are also likely to play a role in shaping the country's foreign policy in the short to medium term.

Mr Idrissov will outline the main items on Astana's foreign policy agenda for approximately 15 minutes, followed by 45 minutes for questions and discussion.

Attendance is by invitation only. 

The 2019–20 fire season in Australia has been unprecedented. To date, an estimated 18 million hectares of fire has cut swathes through the bush – an area greater than that of the average European country and over five times the size of blazes in the Amazon.

This reflects previous predictions of Australian science. Since 2008 and as recently as 2018, scientific bodies have warned that climate change will exacerbate existing conditions for fires and other climatic disasters in Australia. What used to be once-in-a-generation fires now re-appear within 10–15 years with increased ferocity, over longer seasons.

In a country known for climate denial and division, debate has erupted around bushfire management and climate change. One of these is whether controlled burns are the answer to Australia’s climate-affected fire conditions.

There is no single risk reduction strategy. Controlled burning remains key, if adapted to the environment and climate. 

But when three out of four seasons in a year can support destructive bushfires, there are clear limits to what controlled burning and other fire management techniques can achieve. Other ‘adaptation’ measures are also likely to provoke intense debate – including bush clearance. As one Australian expert offered to highlight where Australia has got to, families should probably not go on holiday to bush and beach during the height of summer when temperatures and fire risk peaks. 

So, unless Australia is prepared to debate radical changes to where people live and how land is used, the limits to adaptation imply the need for mitigation. This means supporting ambitious global greenhouse emissions reductions targets. As research from Victoria, one fire-prone state in Australia, highlights, ‘the emissions pathway we follow is the largest determinant of change to many variables [such as temperature] beyond the next few decades.’

Can Australia become a more active global partner on emissions?

Australia accounts for just over one per cent of global emissions, so reducing domestic emissions – even though on a per capita basis they are the highest in the world – will not reduce Australia’s climate risk. Showing international leadership and supporting a powerful coalition of the willing to tackle climate change is the only way ahead. By showing a willingness to adopt climate ambition, Australia can help more constructive worldwide action, and thereby reduce its own risk exposure. 

Leading by example is a politically difficult issue for Australia. Prime Minister Scott Morrison was re-elected in May 2019 on an economic stability platform, and a promise not to imperil employment growth through climate action. Australia has contested UN estimates that it will not meet its existing modest goals for domestic emissions, by seeking to rely on carryover credits from action under the Kyoto Protocol as proof of progress.

It has also distanced itself from concerns over global supply and demand in fossil fuels. Australia remains a global supplier for fossil fuels, including coal – the nation’s coal exports accounted for $67 billion in revenues in 2019 in an expanding but changing Asian market, supplying ‘some of the cheapest electricity in the world’.

Possible influencers of change

With Australians experiencing first-hand the risks of climate change, there is already pressure to do more. Many are sceptical this will translate into domestic targets or export policies that give Australia the moral authority to ask for more action on the global stage.

Here, diverse groups who share a common interest in seeing Australia recover from the bushfires and address future climate risks could be key.

Importantly this includes rural and urban-fringe communities affected by the bushfires. They were part of Morrison’s traditional supporter-base but are angry at the government’s handling of the crisis and increasingly see how tiptoeing around emissions (including exports) has also ‘buried’ open discussion at home on climate-readiness.

Australian states could also find themselves taking a lead role. Virtually all jurisdictions have now committed to their own goals, most based on zero-carbon goals by 2050 (as has New Zealand). These can support modelling for Australia’s energy transition from coal, through gas, to market competitive renewables, while also help to ensure this reflects community expectations on jobs, electricity prices and other costs. 

Other emerging voices include the insurance and banking sectors (the Reserve Bank of Australia warned of the long-term financial stability risks of climate change before the fires) and indigenous Australians (one group of Torres Strait Islanders have filed a complaint to the UN Human Rights Committee which, if heard, will place Australia’s emissions record under the spotlight again). Their challenge now is finding a common language on what a cohesive approach to addressing climate change risk looks like. 

The international picture is mixed. The United States’ poor federal climate policy is a buffer for Australia. French President Emmanuel Macron has tried to raise the cost of inaction for Australia in current EU–Australia trade negotiations, but many large emitters in the Indo-Pacific region remain key Australian trading partners, investors and buyers of Australian coal. 

In the meantime, the United Kingdom is preparing for the meeting of parties to the Paris Agreement in Glasgow in November. A key global event following Brexit, the UK will no doubt be hoping to encourage a leadership circle with national commitments that meet global need to make the Glasgow meeting a success.

The UK public has expressed enormous sympathy for Australia in the bushfires and outrage over ‘climate denialism.’ Australia’s experience will be a cautionary tale of the effects of climate change at the meeting. Could the UK also support Australia to become a less reluctant partner in global climate action?

The Review on Antimicrobial Resistance, chaired by Jim O’Neill, was commissioned by former UK prime minister, David Cameron, in July 2014. Supported by the UK government and the Wellcome Trust, the final report of the review was published in May 2016 and has had a global impact in terms of motivating political leaders and decision-makers to take more seriously the threat posed by antimicrobial resistance.

Yet there is now a perception that the political momentum to address the issue is waning and needs to be reinvigorated.

In a further report produced by Chatham House, the progress of the recommendations of the review is assessed and the key ways to move forward are identified.

Panellists at this event, where highlights of the report are presented, provide their assessment of the progress so far and discuss priorities for future action.

The report was funded by Wellcome.

• The 2016 Review on Antimicrobial Resistance has had a global impact: as an advocacy tool, in raising the profile of antimicrobial resistance (AMR) on the international agenda, and in helping to stimulate a number of new initiatives, in particular relating to the funding of early-stage research.
• However, there has been very little progress on the review’s central and most expensive recommendations for transforming research and development incentives for antibiotics, vaccines and diagnostics.
• There have been significant advances in reducing antibiotic use in agriculture, particularly in high-income countries, but there is a long way to go in low- and middle-income countries (LMICs).
• There has been greater investment in awareness raising but questions remain about its impact and effectiveness in changing behaviour.
• Proposals to restrict over-the-counter sales of antibiotics, as recommended by the Review, have foundered in the face of poor living conditions and access to healthcare in LMICs.
• A major reason for the use of antibiotics in LMICs is the prevalence of unhygienic conditions in the community and in healthcare facilities, which contribute to infection and limit the impact of messages about awareness and infection prevention and control.
• Providing quality healthcare to all and moving towards universal health coverage in LMICs will be crucial in addressing the problems of both adequate access to antibiotics and in restricting over-the-counter sales.
• A greater emphasis on investments in water, sanitation and housing will be central to reducing reliance on antibiotics in LMICs in the longer term. This agenda should inform the operations of governments and funding agencies such as the International Monetary Fund (IMF) and the World Bank.
• Investments have been made in improving surveillance of antibiotic use and resistance, particularly for humans, but more effort is required to create surveillance systems that provide data sufficiently accurate to influence policy and action. This applies also to antibiotics and resistant genes circulating in the environment.
• The emerging innovations in the global governance of AMR need to lead to action rather than more words.